MPSC Licensing Issues Energy Regulatory Partnership Program Abuja, Nigeria July 14-18, 2008 Presented by Robert W. Kehres

Discussion Points Transmission Lines Alternative Electric Suppliers Certificates of Public Convenience and Necessity Rule Service Area Disputes between existing Electric Utilities

Act 30 of 1995 After a disputed effort by Consumers Energy Company to construct a major transmission line, the Legislature granted the Commission authority to approve the siting of major and non-major transmission lines The MPSC has had only two such applications – one was granted and one was rejectede

Requirements of the Act Transmission line case cannot be filed until the company has held public hearings in each municipality Adequate notice must be given to affected areas. Application must identify a route and at least one alternative route Application must be cost beneficial

Alternative Electric Suppliers Commission’s initial effort to open the market to AESs was struck down by the courts Act 141 granted the Commission authority to open energy markets to AESs Markets had to be opened by January 1, 2002 Utilities had to be provided full recovery of stranded costs

AES Requirements Commission established licensing procedure by order AESs must maintain an office in Michigan MPSC had to examine the AES’s managerial, financial, and technical capabilities. AESs must maintain adequate records and agree to collect taxes

Certificates of Public Convenience and Necessity Act 69 of 1929 No public utility shall begin construction of any utility plant or render service for the purpose of carrying on a local business in any place where another utility is conducting a similar business without obtaining from the Commission a certificate of public convenience and necessity

CPCN Requirements Franchise from the municipality Notice to municipalities and other utilities Public hearing to consider –Adequacy of existing service –Investment by the utility –Benefits to be achieved –Effect on rates –Other factors

Rule 411 An administrative rule to govern which of two or more utilities serving one area should be permitted to serve a customer in the area This is not an AES situation This is all about having only one company’s distribution facilities in one area

Rule 411 Customer preference is not necessarily a controlling factor Weight is given to the provision of service by a utility to the location in the past Weight is also given to the distance that facilities must be extended Goal is to eliminate redundant facilities, which only add to all customers’ costs Also, safety is always a concern